Staples says weakness in core office supplies hurting sales

Staples Inc (SPLS) warned that its sales could fall in the current quarter as it sells fewer computers and core office supplies such as ink and toner in North America amid stiff competition from online retailers and big-box chains.

Shares of the largest U.S. office supply retailer, which reported better-than-expected results for the second quarter, rose slightly in light trading before the bell.

The company has been spending heavily on advertising to promote itself as a seller of products other than traditional office supplies. It has also been investing to boost its online business.

Staples is facing increased competition from mass merchants such as Wal-Mart Stores Inc <WMT.N> and online retailers such as Amazon.com Inc <AMZN.O>, which offer cheaper products.

Staples said in March it would close 140 of its North America stores this year to boost profits and focus on its online business.

The company said on Wednesday it closed 80 of these stores in the second quarter ended Aug. 2.

Smaller rival Office Depot Inc <ODP.N> said in May that it would close 400 U.S. stores by the end of 2016.

Staples forecast a profit of 34-39 cents per share for the third quarter ending November.

Analysts on average were expecting 37 cents per share, according to Thomson Reuters I/B/E/S.

Staples' net income fell 20 percent to $81.9 million, or 13 cents per share, in the second quarter. Excluding items, the company earned 12 cents per share.

Total sales fell 1.8 percent to $5.22 billion.

Analysts on average had expected a profit of 11 cents per share and revenue of $5.16 billion.